Powering African Economies Through Distributed, Climate-Smart Energy

Mercy Corps Ventures
Mercy Corps Ventures
6 min readApr 11, 2023

--

The high cost of fuel and limited access to reliable electricity across Africa is holding the continent back. Kofa’s mission is to facilitate access to cost-effective, electric energy where and when it is needed the most. Through a smart network of batteries and swapping stations, Kofa is also promoting the transition to sustainable energy, away from fossil fuels.

Written by Toffene Kama, Investment Principal at Mercy Corps Ventures.

  • In the wake of the Covid-19 crisis, the cost of fuel rose significantly, putting gig and mobility platforms at crossroads. Uber drivers spent 60% of their earnings just on fuel.
  • Motorbike drivers spend ~40% of their income on filling the tank.
  • Electricity grid coverage only reaches 45% of the population across sub-Saharan Africa, while the demand for electricity is projected to triple by 2040.
  • Small businesses face over nine outages a month. Those based in informal market hubs are in such need that they try and extend the grid themselves resulting in thousands of fire outbreaks (Onitsha, Akere, Occas) each year.

What do these events have in common?

It’s about access to affordable energy.

Images courtesy of Premium Times and Graphic.

The cost of, and access to energy, especially in mobility and logistics, has become a major barrier to scaling local businesses. As oil and gas prices spike and blackouts continue, the need for resilient energy systems for consumers and small businesses has become essential.

That’s why we’re interested in the new generation of African startups tackling this challenge with a distributed electric energy network.

Tesla’s resounding success and China and India’s efforts to convert entire industries into electric all hint at an even larger demand in Africa where the cost of fossil fuel is higher.

There are approximately 30 million moto-taxis in Africa, spending about $100 billion each year on fuel ($11/day/bike). The opportunity to convert them into electric bikes is huge.

Mobility and logistics startups across Africa saw this opportunity and started importing and assembling electric motorbikes but faced scaling issues. Managing electric vehicle (EV) infrastructure required new skills and operations far beyond their core business. Today, a new generation of startups is taking this on with new types of batteries, charging stations, and vehicles and utilizing digital technologies (IOT sensors, and digital payment and lending solutions) in order to scale.

Smart batteries for multi-usage — the Kofa solution

Kofa is a Ghanaian company on a mission to create an affordable, sustainable, and customer-driven electricity network. They do this by producing portable batteries and a network of swapping stations for multiple use cases, enabling a transition away from fossil fuels in a manner that is adapted to realities (weather, roads, economies) in Africa.

Images courtesy of Kofa.

We are looking for creative takes on hard and complex problems, paired with robust execution skills. When I met Erik Nygard, Kofa’s founder, in Accra last year, our “geeky” discussion about energy quickly turned into a passionate debate about the challenges and hacks to energy access across the continent. Erik founded and sold Limejump, one of the best renewable energy balancing platforms in the UK, before returning to Africa (where he grew up) to take the next major challenge of his life.

Starting with mobility, the company offers one of the continent’s smartest solutions to convert Africa’s 30 million+ gas-powered motorbikes to EVs while offering customers additional ways to use the battery over its lifetime: grid backup at home; grid alternative in sub-urban shops to power retailer appliances, and more.

The solution consists of:

  • A smart battery designed by Kofa with an embedded IOT board for smarter, more efficient energy management. The battery comes with a required inverter box and a docking hub to provide productive AC capability. When the battery eventually loses efficiency, it can be configured to serve energy needs that are less intensive compared to mobility.
  • A distributed network of swapping stations where B2B and retail customers can swap their batteries for immediate use. The network will be highly distributed around cities and batteries are lightweight, making the swap as easy and convenient as getting a coffee
  • A software platform to manage the overall network, allowing customers access to power when and how they need it while expanding the energy infrastructure. The platform controls and synchronizes the batteries (demand) with swapping stations (supply). Smart batteries can be monitored remotely and adjusted according to the usage conditions.
Images courtesy of Kofa.

At scale, the meshed network of batteries and stations starts operating as a micro-grid which can send its excess production back to the main grid and/or provide electricity backup for nearby mission-critical services for local communities. As it evolves it could be used to store excess energy generated by decentralized renewable sources for use during times of high demand.

In reality, the battery is a “packet of energy”, which can be used anywhere and anytime. For instance, a user could first plug the battery into their motorbike to commute, saving over 30% on fuel costs. At the destination, the customer may use it to power their retail outlet (to mitigate the lack of access to the grid). When back at home, it may even be used as a power supply backup instead of petrol generators.

In essence, the battery follows the customer along their daily journey, as an energy companion, just like a mobile phone has become our communication companion.

The battery is “energy going cableless”, just like the mobile phone went wireless a few decades ago kicking off Africa’s digital revolution.

The electric revolution is on its way, there is nothing to stop it across the continent.

“Kofa’s mission is to facilitate access to cost-effective, electric energy where and when it is needed the most. Through a smart network of batteries and swapping stations, Kofa is also promoting the transition to sustainable energy, away from fossil fuels.”
Erik Nygard — Founder of Kofa

The Kofa Team

Why we invested

Kofa’s market opportunity is dramatic, in both financial and environmental terms, generating billions of dollars of value for African energy consumers and displacing tens of millions of tons of carbon. Alongside this, EV and mobility solutions cross-cut all of our thesis areas:

There is increasing pressure on global supply chains and fuel costs, driving increased demand for localized players. In Ghana, an enabling environment for renewable development is growing, with accommodating tariff and tax benefits for local players, including manufacture and assembly. Enabling local production (through proximity charging stations) and mobility is the best way to support remote, small businesses stay open — driving financial resilience — while using a cleaner and more affordable energy source.

Stay tuned for more updates on our portfolio here.

--

--